Autos bosses focus on technology rather than PSA-Opel

Agnieszka Flak and Andreas Cremer

(Adds fund manager, executive comments, show news, background)

* PSA-Opel deal creates Europe's No.2 carmaker

* VW sees technology shifts more important for industry

* Toyota says investment in hybrids paying off

* Ford says tariff-free Brexit deal key for UK workforce

GENEVA, March 7 (Reuters) - The auto industry is facing

seismic changes with the rise of electric vehicles, automated

driving and car sharing set to eclipse even big mergers such as

PSA's purchase of Opel, executives at the Geneva auto show said.

Peugeot maker PSA Group said on Monday it had

agreed to buy loss-making Opel from General Motors,

creating Europe's second-biggest carmaker behind Volkswagen

and sparking speculation of more consolidation.

However, some auto executives gathering in Geneva said the

deal was unlikely to alter the landscape on its own, with

changing consumer habits and new rivals in Silicon Valley and

China all likely to have a much bigger impact on carmakers.

"My feeling is that the industry as a whole and brand

positioning will change in the next 10 or 15 years, and that

comes in addition to traditional consolidation," said Herbert

Diess, head of Volkswagen's (VW) passenger car division.

"We are really in a transitionary phase for the industry.

There are new competitors on the horizon like Tesla or Chinese

ventures," Diess told reporters, adding that he did not expect a

wave of Opel-style mergers.

Volkswagen (VW) is investing billions of euros in electric

vehicles, automated driving and new mobility services, in part

as it tries to recover from a costly emissions test cheating

scandal that has hit demand for diesel vehicles.

The company, which is also cutting costs, is unveiling a

fully self-driving concept car at the Geneva show.

Karl Schlicht, head of European sales at Japan's Toyota

, also played down the impact of the PSA-Opel deal,

which brings together carmakers with a heavy focus on diesel and

low-margin fleet vehicles.

"We ran a counter strategy in Europe which may not look as

successful for some past years because our volumes were a bit

lower, but in terms of where we want to end up, it's turning out

to be a good strategy," he said, referring to Toyota's

investment in hybrid vehicles.

Toyota forecasts its European sales will rise 5 percent this

year while the market is expected to grow just 1 percent amid

uncertainty over German and French elections and Britain's

departure from the European Union.

BMW boss Harald Krueger, however, said the cost of

investments in new technologies could spur deals among smaller

carmakers.

'NO SURVIVAL OF THE FATTEST'

Some industry analysts also say an enlarged PSA could

actually ease the pressure on rivals if CEO Carlos Tavares uses

similar methods to turn a profit at Opel that worked at PSA.

In the three years since Tavares took the helm at PSA, its

existing brands - Peugeot, Citroen and DS - have significantly

increased pricing relative to benchmarked rivals, sometimes at

the expense of sales.

A similar approach at Opel, which has been among the

region's most aggressive discounters, could give the entire

European mass-market car industry some breathing space.

"The deal could then ease price pressures, lead to a

stabilisation, or even a recovery," said Michele Pedroni, fund

manager at SYZ Asset Management in Geneva.

GM and PSA have shared production of commercial vans and

developed common vehicle platforms for years, and the Opel

Crossland X and the Citroen C-Aircross concept SUV on show in

Geneva are a sign of the new projects and synergies they hope to

achieve as one company.

Stefan Bratzel of the Center of Automotive Management in

Germany said the potential improvement in profitability at

PSA-Opel posed a bigger challenge to rivals than its sheer size.

"There is no survival of the fattest," he said. "Just

because you're big, you do not win the game."

Some analysts say Fiat Chrysler Automobiles (FCA),

which has less than 7 percent of the European market compared

with PSA-Opel's more than 16 percent, could be among the most

pressured, with its high debts and costly plants in Italy.

"Being a mid-sized player in Europe and not particularly

profitable in the region leaves them quite vulnerable," said

Felipe Munoz, an automotive analyst at JATO. "They are too

expensive to be bought by one of the big guys, and they are not

in a position to grow unless they find a partner."

FCA boss Sergio Marchionne has long advocated mergers to

share the cost of cleaner and more technologically advanced

cars, but his attempt to woo GM was rebuffed and with the U.S.

firm now leaving Europe that option seems even less likely.

Marchionne said on Tuesday that FCA did not need a merger,

but he wouldn't rule one out and said he could approach GM again

if it was the right thing to do.

He also said the PSA-Opel deal might over time encourage VW

to consider a tie-up with his own company, although one industry

investment banker told Reuters that was unlikely as VW focuses

on its transformation following the dieselgate scandal.

Ford, another mid-sized player in Europe, highlighted

the importance of keeping costs down.

European boss Jim Farley told Reuters it was "really, really

important" for the future of its more than 14,000 workers in

Britain that the country strikes a tariff-free trade deal when

it leaves the European Union.

(Additional reporting by Laurence Frost, Costas Pitas and

Edward Taylor; writing by Mark Potter; editing by Jason Neely

and David Clarke)